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IFRS newsletter - August 2011


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Welcome to this edition of the IFRS Newsletter of Deloitte Luxembourg.

The International Accounting Standards Board (“IASB”) advanced with its projects this year, resulting in the issuance of several standards, amendments, exposure drafts and other developments. Although not all due dates have been met by the IASB, there are significant developments, which will be discussed in this is issue:

Amendments to IAS 19 Employee Benefits

The IASB issued amendments to IAS 19 Employee Benefits, introducing new requirements on the accounting for employee benefits, with one fundamental change, the removal of the ‘corridor approach`.

Presentation of Items of Other Comprehensive Income - Amendments to IAS 1 Presentation of Financial Statements

The IASB has amended IAS 1 as it relates to the presentation of the statement of other comprehensive income. Companies will continue to have the option of presenting one statement or two separate statements. Most importantly, items of other comprehensive income must be separately grouped into items that will or will not be subsequently reclassified to (recycled through) profit or loss and related taxes must be grouped similarly.

Exposure Draft of Improvements to IFRSs 2011

The IASB has released an exposure draft for improvements to be carried out during 2011. The proposed improvements, which are generally minor and clarifying in nature, would affect IFRS 1, IAS 1, IAS 16, IAS 32, and IAS 34 if approved by the IASB.

To be issued soon: Updated exposure drafts on Leases and Revenue recognition
With the publication of exposure drafts in 2010, the IASB introduced significant changes to existing accounting practice resulting in severe criticisms from all sectors. In order to reflect the feedback received from the comment letters in the standards, the Board overhauled the initial exposure draft and will now re-issue an updated version in the coming months, since decisions taken to date were sufficiently different from those published in the initial exposure drafts, even if the deliberations haven`t completed yet.

Effective date of IFRS 9

In August the IASB issued an exposure draft to propose changing the mandatory effective date of IFRS 9, so that entities would be required to apply it for annual periods beginning on or after 1 January 2015 rather than being required to apply it for annual periods beginning on or after 1 January 2013.

Asset and liability offsetting - reconsidered

Today, financial assets and financial liabilities may be presented in an entity’s statement of financial position as two separate amounts, or as a single net amount, depending on whether the entity reports using IFRSs or US GAAP. These accounting differences result in the single largest quantitative difference in reported numbers in statements of financial position prepared in accordance with IFRSs or US GAAP.

In response to stakeholders` concern the IASB and FASB decided to jointly address differences in their respective standards on balance sheet netting of derivative contracts and financial instruments, so in January 2011 they issued an exposure draft. In June 2011, in the light of feedback received on the ED, the boards decided to move forward with different offsetting models, but will require information to be provided in the financial statements to help reconcile differences in the offsetting requirements between IFRSs and US GAAP.

Holdings of Eurozone sovereign debt

The decline in creditworthiness of some Eurozone countries has become evident in the recent months. The need for transparent disclosures on Eurozone sovereign debt exposures will also be critical to understanding the financial position and performance for those entities that have material exposures.

Specifically, this relates to holdings of debt (or other loans) issued by the sovereign states subject to a current plan, i.e. Greece, Portugal, Spain, Italy and Ireland, but may also be relevant to holdings or other sovereign states where recent market sentiment has raised doubt about their credit quality.

 

All the topics mentioned above are detailed in the attached PDF.

 

For additional information on these topics and on services we could provide to your entity, contact us at luifrsdesk@deloitte.lu. Deloitte has a range of tools and publications to assist in implementing and reporting under IFRS.

We hope you find this issue useful. As always, we value and welcome your comments and feedback.

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